Biden’s plan to fix the housing shortage

Plus, before you cold call, read this!

Grace Townsley
June 10, 2022

The path is clear

We’re covering a story in today’s newsletter that talks about how much money has been made in real estate over the past year. This story reminded James & I that when we first set out in this career, we were going into a proven industry where there were already very successful agents making real moves. 

That's all we needed to know. We didn’t get into real estate to reinvent the wheel. We jumped in ready to work harder, more efficiently, and better than anyone else. Those other agents paved the way for us, just like we’re hopefully doing for you now. 

Our vision is to show agents like you all the many possibilities for your career and how to achieve them. As long as you stay in your lane, work ethically, and show up over and over, that’s all you need to do to be successful. Yes, you’ll make mistakes along the way. That’s a given! But don’t give up, ever. That’s how you absolutely crush your goals. 

- David

An answer to the housing supply crisis?

Source: Unsplash

A comprehensive bill designed to increase the nation’s housing supply is slowly making its way through Congress. While the bill has yet to be approved by the Senate, it just might help the fight against inflation by increasing the supply of affordable houses and lowering the cost of ownership. If passed, the Biden administration plans to take these actions:

  • Boost the housing supply by allowing federal funds to be used for building accessory dwelling units and modular or manufactured homes
  • Encourage cities and states to increase their density by dropping restrictive zoning laws that limit building
  • Use strategic transportation grants to reward cities and states that make it easier to add more local housing
  • Expand low-income housing tax credits to help more individuals afford rising housing costs

Our take

It’s all about supply. We've had such a shortage that we need corrective moves like this one. This bill, in conjunction with the rate rise, will help get more people into homes. If it passes, it will help normalize the market and help buyers afford homes they’ll be proud to own. It’s a good thing that the government is recognizing what’s happening in the market, and doing something to help people through it.

One home sale, two new jobs

Source: Unsplash

Real estate makes the US go ‘round, and now we’ve got the GDP data to prove it. In 2021, real estate activity accounted for nearly 17% ($3.9 billion) of the national GDP. According to a recent NAR report, when you add up all the expenses related to a real estate deal–agent commissions, moving costs, transaction fees, etc.--every home sale generates around $113,000 of positive economic impact. That impact, in turn, creates an average of two jobs.

The average income generated per home sale is even higher in these star-performing states:

  1. Hawaii - $306,130
  2. District of Columbia - $280,180
  3. California - $246,700
  4. Massachusetts - $191,680
  5. Washington - $187,630

Our take

These numbers just show how much money there is to be made in real estate. With real estate activity accounting for nearly 17% of our GDP, it’s clear that this is a great market with enormous potential. Let this be your motivation to get out there and get a piece of it!  

Mortgage demand hits a 22-year low

Source: Unsplash

With interest rates on the rise last week, mortgage applications have plummeted. Rates jumped to an average of 5.4%, meaning nearly everyone with a mortgage has a rate lower than today’s rate. Here’s how the latest increase is impacting the market: 

  • Mortgage applications tumbled 6.5% last week to the lowest level in 22 years
  • Demand for refinances dropped another 6%, now down a whopping 75% YoY
  • Homeowners looking to cash out their equity are now opting to take out a second mortgage instead, just to avoid losing their great interest rate

Our take

This major drop in mortgage applications is the result of two significant factors: higher rates and incredibly low inventory. Even if they can afford to buy right now, clients are having a hard time finding homes. Hopefully the slowdown will encourage more inventory to hit the market soon, so the situation can finally start improving!

Schematics

The news that just missed the cut

Source: Wall Street Journal

Foundation Plans

Advice from James and David to win the day

Cold calling. Most agents either love it or hate it! But when you boil it down, there’s absolutely no better way to maximize your time and grow your business than picking up the phone and making those calls. Here’s how to get the most out of smiling and dialing. 

  • Start with old listings. When you’re looking for leads to call, start with old listings, for sale by owner listings, expired listings, and for rent by owner. These prospects probably aren’t working with an agent and may still be motivated to sell if they trust that you truly can help them. 
  • Give them a reason to listen… and to answer again. If the prospect isn’t ready to take the next step, let them know you’ll be calling again in a few months with an update on their home’s value and the local market. That makes the call about them and proves your worth as a connection. 
  • Cold call with a buyer in mind. One of the best ways to find off-market listings is to have a buyer in mind when you cold call properties. Not only does it give the homeowner a strong reason to answer the phone, it shows you’re the kind of agent who will do anything for your clients. 

For more high-impact door-knocking and cold-calling tips, check out this podcast.

Q&A

You ask, James and David answer!

Q: How do you get people to want you as their broker?

Jenny, The Blueprint reader, New York

A: Be honest and be excited. People want to work with someone they can trust and someone who is truly excited to be going on this buying or selling journey with them. If you can deliver both, you’ll become a go-to broker.

James & David

We’ll be back next week with another answer to a real reader question. Submit yours, here!

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Source: Rocket Mortgage

“Success is the sum of small efforts, repeated day-in and day-out.” - Robert Collier

This weekend, think on that bit of wisdom. Your success is built on the little things you do today, tomorrow, and the next day. Consistency, focus, and repeating what works… that’s the real secret to a long-term real estate career. 

Have a great weekend.

- James and David

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